2019 Climate Change Management Report

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About this reportIn FY 2019 we began assessing our climate management program and disclosures against the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD). Using the TCFD recommendations as framework, we will continue the development of our climate management program over the coming years and disclose information where relevant. This includes our long-standing public disclosure via the CDP.

BD is one of over 1,000 organizations publicly supporting the recommendations of the TCFD.

The disclosures in this report follow the recommendations and guidance set out in the June 2017 report from the TCFD.

Climate Change Management

Solar panels installed at the BD European Headquarters in Eysins, Switzerland.

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GovernanceOur Integrated Supply Chain (ISC) teams, which include manufacturing, procurement, supply chain and EHS&S (Environment, Health, Safety & Sustainability) are primarily responsible for managing and mitigating climate change risk.

Within the ISC team, the VP EHS&S leads the company’s sustainability efforts, including climate change strategies, and oversees day-to-day climate change management-related issues including carbon reduction targets and renewable energy. The EHS&S team is resourced to address four broad areas of focus regarding climate change: stakeholder engagement and reporting, human rights, product stewardship and EHS. This team is responsible for compiling our greenhouse gas (GHG) inventory and working with BD sites to reduce emissions through energy reduction and renewable energy projects. The EHS&S team partners with global manufacturing, supply chain and procurement teams to create an integrated approach to energy management as well as incorporate climate risks, such as extreme weather, into business continuity planning programs. The EHS&S team also works with the Enterprise Risk Management team to provide input on risks and opportunities related to climate change through our company’s Enterprise Risk Management (ERM) program.

The VP EHS&S reports to the executive vice president (EVP) of Integrated Supply. This position reports to the CEO and is part

of the company’s Executive Leadership team. The CEO is a member of our Board of Directors.

The VP EHS&S provides regular updates on sustainability performance, including carbon reduction targets, to the CEO and Executive Leadership team. The EVP Integrated Supply Chain provides regular updates on integrated supply chain risks to the Executive Leadership team and Board of Directors, which may include climate or other EHS-related risks. Our CEO oversees the management of several sustainability-related issues, including climate-related issues.

The Corporate Governance and Nominating Committee of the Board oversees matters that involve the company’s image, reputation and our standing as a responsible corporate citizen; this includes matters related to climate change management. The VP EHS&S provides an update on EHS&S activities, including those pertaining to climate change management, to the committee on an annual basis.

As important matters arise, such as climate issues impacting business continuity or regulatory updates which could impact the company’s strategy, either the VP EHS&S or the EVP Integrated Supply Chain will brief the Board as needed.

On-site fuel cells at our San Jose, CA, facility.

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StrategyA summary of climate risks and opportunities that could have a substantive impact on our business is outlined below.

We define substantive strategic risk as climate-related risks that have more variability and uncertainty over a longer time frame than is normally considered for financial risk. The majority of disclosures in this report fall under the category of substantive strategic risk.

Any risk or opportunity that could result in a change in business, operations, revenue or expenditure that would prompt disclosure in other company filings (e.g., 10-K) may be considered financially substantive for the purposes of TCFD-recommended and CDP disclosures. This applies to both supply chain and direct operations.

When considering climate-related risks and opportunities, we define the magnitude of potential impact as follows:

• Low – insignificant impact on revenues and/or disruption to operations

• Medium – some impact on revenues and/or disruption to operations, likely limited to a geographic region and/or number of business units. This may result in disclosure in financial reports.

• High – significant impact on revenues and/or disruption to operations, likely affecting multiple regions and/or business units. This will likely result in disclosures in financial reports.

We consider short-term horizon to be up to three years in the context of climate-related risks and opportunities. This is in alignment with other general financial planning and business practices (such as financial planning for energy efficiency projects).

Medium-term time horizons are defined as three to ten years in alignment with general financial planning and business processes with a medium-term outlook, such as power purchase agreements, which often have terms of around ten years.

Long-term time horizons are aligned with other business practices and long-term goals. For example, our company’s 2020 sustainability goals with a 2008 baseline fits into a long-term time-horizon.

RisksWhere the risk occurs in the value chain:

Direct operations

Risk type: Acute physical risk

Climate-related risk driver: Increased severity and frequency of extreme weather events such as cyclones and floodsPotential financial impact: Reduced revenue from decreased production capacity (e.g., transport difficulties, supply

chain interruptions)Time horizon: Medium termLikelihood: About as likely as not to occurMagnitude of impact: Medium - lowDescription: There is evidence to suggest that climate change is already impacting the frequency and severity

of tropical storms. The impact of an extreme weather event on healthcare was exemplified by Hurricane Maria. As reported in the results for our first fiscal quarter in 2018, costs of $7 million were incurred as a result of hurricane-related damage to our production facilities in Puerto Rico from Hurricane Maria.

We have manufacturing sites all over the world. In some instances, the manufacturing of certain of our product lines is concentrated in one or more of our plants. Natural disasters (including pandemics), war, terrorism, labor disruptions and international conflicts, and actions taken by the United States and other governments or by our customers or suppliers in response to such events, could cause significant economic disruption and political and social instability in the United States and areas outside of the United States in which we operate. These events could result in decreased demand for our products, adversely affect our manufacturing and distribution capabilities, or increase the costs for or cause interruptions in the supply of materials from our suppliers.

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Where the risk occurs in the value chain:

Direct operations

Risk type: Transition risk, emerging regulation

Climate-related risk driver: Carbon pricing mechanismsPotential financial impact: Increased indirect operating costsTime horizon: Medium termLikelihood: Exceptionally unlikely to occurMagnitude of impact: LowDescription: Local and national governments may implement taxes on fuel and energy to mitigate the impacts

of climate change, and these taxes may increase over time in the areas where BD operates. BD is currently subject to regulatory programs in regions we operate, which impacts the cost of utilities, taxes and compliance fines in these regions. While only carbon schemes such as the UK Carbon Reduction Commitment (CRC) has impacted our operations to date, we have manufacturing operations in 10 countries where there is either existing or proposed regulation around carbon pricing. This excludes subnational regulations or implicit carbon pricing, such as those concerning energy efficiency or renewable energy. While it is possible that these regulations may expand to our industry or lower their requirements on operation size, we consider this to be unlikely in the medium-term. In a transition to a low-carbon economy, it is possible that these locations or our global operations may qualify for carbon pricing. We consider this scenario to be extremely unlikely in the medium term, particularly as it applies to our global operations.

Where the risk occurs in the value chain:

Downstream, customer

Risk type: Acute, physical risk

Climate-related risk driver: Increased severity of extreme weather events such as cyclones and floodsPotential financial impact: Decreased revenues due to reduced demand for products and servicesTime horizon: Medium termLikelihood: About as likely as not to occurMagnitude of impact: MediumDescription: Climate change could impact our customers as severe weather events increase in frequency

and distribution.

Hospitals and other medical care facilities can be impacted by severe weather through reduced demand, where patients may cancel or defer elective treatments and procedures, and/or physical damage to infrastructure and facilities may require the suspension of operations. Following natural disasters, the number of uninsured or underinsured patients can also increase, which can lead to lower rates of reimbursement for our US customers.

We sell products to researchers at pharmaceutical and biotechnology companies, academic institutions, government laboratories and private foundations. Research and development spending of our customers can fluctuate based on spending priorities and general economic conditions and may also be impacted by costs relating to physical damage to infrastructure and facilities resulting in the suspension of operations.

These factors may lead to budget restrictions for our customers, and potentially lower revenues for BD.

While not related to severe weather, we have seen similar trends across hospitals and other medical care facilities and research institutions due to the COVID-19 crisis. Our FY 2020 third quarter results reflected the impact of COVID-19 on healthcare around the world, as we saw strong demand for COVID-19-related diagnostics and significant pressure on the parts of our portfolio that support elective procedures, research, routine care and lab testing.

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Where the risk occurs in the value chain:

Upstream, supply chain

Risk type: Chronic physical risk

Climate-related risk driver: Availability of raw materialsPotential financial impact: Increased operating costsTime horizon: Short – medium termLikelihood: About as likely as not to occurMagnitude of impact: MediumDescription: A reduction or interruption in the supply of certain raw materials and components could adversely

affect our operating results. We purchase many different types of raw materials and components used in our products. Certain raw materials and components are not available from multiple sources. In addition, for quality assurance, cost-effectiveness and other reasons, certain raw materials and components are purchased from sole suppliers. The price and supply of these materials and components may be impacted or disrupted for reasons beyond our control, for example, extreme weather events. While we work with suppliers to ensure continuity of supply, no assurance can be given that these efforts will be successful. In addition, due to regulatory requirements relating to the qualification of suppliers, we may not be able to establish additional or replacement sources on a timely basis or without excessive cost. The termination, reduction or interruption in supply of these raw materials and components could adversely impact our ability to manufacture and sell certain of our products.

Where the risk occurs in the value chain:

Upstream, supply chain

Risk type: Transition risk, market

Climate-related risk driver: Increased cost of raw materialsPotential financial impact: Increased operating costsTime horizon: Short termLikelihood: About as likely as not to occurMagnitude of impact: MediumDescription: BD has more than 700 core suppliers that provide key materials, including plastics, glass, metals,

textiles, electronic and mechanical subassemblies, and various paper, agricultural, biological, chemical and petrochemical products. Our results of operations could be negatively impacted by volatility in the cost of raw materials, components, freight and energy. In particular, BD purchases supplies of resins, which are oil-based components used in the manufacture of certain products. Any significant increases in resin costs could adversely impact future operating results. Increases in the price of oil can also increase our company’s costs for packaging and transportation. New laws or regulations adopted in response to climate change could also increase energy costs and the costs of certain raw materials and components. We may not be able to offset increases in these costs through other cost reductions

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Where the opportunity occurs in the value chain:

Direct operations

Opportunity type: Resource efficiency

Climate-related opportunity driver:

Reduced water usage and consumption

Financial impact: Reduced indirect operating costs (e.g., through efficiency gains and cost reductions)Time horizon: Short termLikelihood: About as likely as not to occurMagnitude of impact: LowDescription: Reliable and high-quality water is particularly important to our business in order to maintain strict

quality specifications. There are many instances where projects have savings and efficiencies in multiple sustainability categories—i.e., a project that reduces energy consumption may also have a significant water reduction associated with it. For example, we have implemented water recovery processes (e.g., water purification plant) that have both conserved water and reduced our energy consumption; similarly, optimizing process heating reduces the use of steam and water. As water is still a relatively low-cost resource in most of the regions where we operate, water efficiency projects often do not have as favorable of a return on investment as other sustainability or capital investment projects. As an outcome of this influence, we can utilize the Carbon Capital Fund for projects with a sustainability benefit (including water). Managing this risk enables us to capitalize on more opportunities, such as reduced operational costs over the long term.

OpportunitiesWhere the opportunity occurs in the value chain:

Direct operations

Opportunity type: Resource efficiency

Climate-related opportunity driver:

Use of more efficient production and distribution processes

Potential financial impact: Reduced indirect operating costs (e.g., through efficiency gains and cost reductions)Time horizon: Short termLikelihood: About as likely as not to occurMagnitude of impact: LowDescription: Increased cost for traditional energy as a result of climate change makes capital investments in

renewable energy (or projects with a longer return on investment) more feasible and save more money over the lifetime of the project. This is particularly relevant for BD, where rising costs from both our energy usage as well as a portion of our raw material base (plastic resins) as well as competition from low-cost producers around the world can reduce our competitive advantage. As a result, we implemented a policy that dedicates $10 million in capital per year (Carbon Capital Fund) to projects that may fall outside of traditional funding models but have a sustainability benefit. This fund will increase the number of projects with sustainability benefits and associated cost savings and contribute to our company’s competitiveness both in the short and long-term.

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Where the opportunity occurs in the value chain:

Downstream, customer

Opportunity type: Products and services

Climate-related opportunity driver:

Health impacts of climate change

Financial impact: Increased revenues resulting from increased demand for products and services Time horizon: Medium termLikelihood: More likely than not to occurMagnitude of impact: MediumDescription: With health-related impacts of climate change expected to increase, this may increase the need

for products and solutions provided by BD, such as diagnostics and delivery systems. Health impacts could include; increase in vector-borne and infectious diseases; alterations in disease patterns requiring diagnostic and surveillance solutions; emergence of new diseases requiring BD technologies that enable medical research; increase in antimicrobial resistance (AMR) (exacerbated by climate change) potentially increasing demand for our company’s diagnostic and surveillance solutions; and disproportionate climate-related health impacts in developing countries increasing demand for our company’s low cost-innovations.

Where the opportunity occurs in the value chain:

Downstream, customer

Opportunity type: Products and services

Climate-related opportunity driver:

Shift in consumer preferences

Financial impact: Increased revenues resulting from increased demand for products and servicesTime horizon: Short termLikelihood: About as likely as not to occurMagnitude of impact: LowDescription: We face changing customer preferences and requirements, including increased customer demand

for more environmentally preferable products as they become more concerned about climate change and its impacts. While climate change criteria are not currently used as a purchasing criterion for our customers, we receive a significant number of requests for sustainability information. While no formal tracking mechanism exists, we estimate sustainability criteria to be included in ~85% of request for proposals from European-based customers, 50% from Australia/New Zealand and a significant portion from US-based customers as well. As a company with a proven reputation of maintaining the quality and safety of our products while reducing our carbon footprint, we are strategically positioned to manage this opportunity. We also benefit from reducing the energy-related costs associated with producing a product as it increases our competitiveness in a market that increasingly looks towards low-cost solutions.

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How risks and opportunities have influenced our strategy and financial planning processesThe aspects of climate change that have most influenced our strategy are physical risks to operations, regulatory risks (such as increased costs in fuel or raw materials), availability of water for our operations and reputational considerations in both the short and long term.

These risks have translated into efforts to drive operational efficiencies wherever possible, as well as increasing our renewable energy use. Opportunities such as customer preferences for environmentally preferable products have also influenced our product and marketing strategies. While our sustainability strategy is managed at the corporate level, the integration of this into business strategy varies among our company’s segments because

of diverse geographic locations and product portfolios. All business segments work towards the same 2020 sustainability goals to increase operational efficiency, but certain segments have a heavier emphasis on product sustainability. For example, the BD Medical segment produces drug delivery systems (such as needles, syringes, catheters, etc), which are primarily single-use, in order to prevent the spread of infection. Therefore, environmentally preferable product considerations such as less material and recycled content (where possible) are a heavier area of focus for this segment. In other business segments where instruments are part of the portfolio, the use phase has the greatest impact, and more consideration is given to the energy efficiency of products.

The following describes where and how specific risks and opportunities have influenced our strategyProducts and services, and investment in R&D

Some suppliers, facilities or product lines could be impacted by the risk of climate-related issues in products and services. Carbon regulation and rise of raw material costs due to acute and chronic climate change events could impact the cost of products. At BD, we view climate change as an issue affecting the health of the global population, which will likely disproportionately impact vulnerable populations such as those without access to healthcare. The global GHG emission trajectory is expected to increase the frequency and intensity of some extreme weather events, and along with increasing temperatures, these factors will bring about a range of health risks and population impacts. Heat-related fatalities and illnesses, such as heat stroke and respiratory illnesses, will increase due to rising temperatures and levels of air pollution. Increased flooding will affect waterborne illnesses and the spread of vector-borne diseases, such as malaria, Zika virus and West Nile virus. These factors will place strain on the healthcare infrastructure, so we believe it is imperative that we take steps not only to reduce GHG emissions from our own operations, but also take steps to manage—and where possible mitigate—the potential risks and negative impacts of climate change across our value chain. As part of the innovation pillar of our sustainability strategy, we have a portfolio of solutions that can help detect and diagnose illnesses that will be exacerbated by climate change, such as AMR. Inherent in our Purpose of advancing the world of health™ is working to meet emerging or unmet health needs that our products, solutions and expertise can support.

While we do not currently have a specific goal or program around investment in R&D for climate-related diseases, we see risks and opportunities related to the nexus of climate change and human health as something that would surface as part of our work to address unmet health needs. We would allocate investments through existing funding channels within the organization. The magnitude of this impact is expected to be small to medium in relation to other R&D investments. Finally, improvements to our products and solutions to reduce their carbon footprint across their life cycle will support our customers in pursuit of their sustainability goals. This could include designing electrical equipment to be more energy efficient, considering alternative materials and making our supply chain networks more efficient. The magnitude of this impact has been small compared to revenue from other types of products and services in our portfolio.

Operations Some suppliers, facilities, or product lines could be impacted by risk from climate change to our operations. This could include carbon regulation increasing operational costs, acute events such as an increase in extreme hurricanes impacting BD manufacturing facilities and/or supplier facilities, and chronic events such as prolonged drought impacting water costs in operations. A Carbon Capital Fund has been put in place to help mitigate these risks by funding projects that reduce the amount of energy and water we are dependent on in our operations. We have also incorporated this risk into our business continuity planning for operations by evaluating where we manufacture products that are classified as “critical to healthcare” and pursuing redundant manufacturing capabilities where appropriate. The magnitude of this impact has been small compared to other factors like operational expenditures and annual revenue.

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Supply chain and/or value chain

The risks and opportunities in our supply chain are in the form of rising energy costs that would impact our process and a reduction or interruption in the supply of certain raw materials and components that could adversely affect our operations.

Severe weather that impacts our supply chain would increase our risk of disruption to customers. This is managed through procurement expertise. Our company’s strategic sourcing teams continuously assess our sole sourced raw materials and maintain business continuity plans with our suppliers.

Our company’s continuity plans may include securing secondary supply with alternate suppliers, qualification of alternate manufacturing facilities, maintaining contingency stock, internal development of supply and establishment of technology escrow accounts. In 2016, we refined our approach to supplier risk profiling by adding reputation risks into our Enterprise Supplier Risk Management process, for direct suppliers. An initial set of risks were identified, and mitigation plans are in progress. We will continue to refine our risk model and adjust our top risks accordingly. However, if frequency of disruption increases, potential impacts could be significant as our supply chain is large and complex.

Adaptation and mitigation activities

The Carbon Capital Fund serves adaptation and mitigation activities as the funds can be allocated to all facilities or product lines at the discretion of the central EHS&S team.

The cost of management to oversee the 2020 sustainability goals is incorporated into existing budgets. Costs also include yearly capital investments in emission reduction activities. The magnitude of this impact has been small compared to other factors like operational expenditures and annual revenue.

The following describes how risks and opportunities have influenced our financial planning process:Revenues Revenue planning is focused on R&D efforts which to date have prioritized medical device technology. While we

recognize that climate change will have implications on population health globally, impacts on revenue specific to climate change have not been evaluated.

Indirect costs Risks and opportunities that would affect operating costs are factored into our financial planning through normal budgeting processes for the short term and additional funding from the Carbon Capital Fund. These risks include increasing operational costs from regulation or rising energy costs.

Operating costs Risks and opportunities that would affect operating costs are factored into our financial planning through normal budgeting processes for the short term and supplemented by funding from the Carbon Capital Fund (for costs related to energy or utilities). These risks include increasing operational costs from regulation or rising energy costs. In addition to the Carbon Capital Fund, BD entered into multiple power purchase agreements (PPAs) at various facilities to secure a supply of renewable energy for our operations. These PPAs range from on-site renewable energy installations to indirect procurement of green energy off-site.

By signing these agreements and fixing our energy costs over a long period of time, we are managing our operating costs as well as reducing climate impacts. The magnitude of impact is relatively small (less than 5% of total operating costs).

Capital expenditures/Capital allocation

Risks and opportunities that affect capital expenditure/capital allocation are factored into our financial planning through the Carbon Capital Fund, which is used to finance projects that help lower carbon emissions, such as energy efficiency projects and renewable energy installations.

Acquisitions and divestments

Risks and opportunities from climate change are not currently factored into acquisitions and divestments.

Access to capital

Risks from climate change do not impact access to capital.

For some risks and opportunities, such as large-scale energy efficiency projects or long-term renewable energy purchases, we utilize an internal capital funding program.

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How we integrate climate-related issues into our strategyThe internal process for collecting and reporting information to inform our climate change strategy is coordinated by our EHS&S team. This includes evaluating risks and opportunities from climate change through stakeholder engagements and monitoring sustainability megatrends through benchmarking organizations and think tanks. We utilize data and information provided by our company’s internal technical experts, such as customer-facing teams, regulatory specialists and R&D teams. We also collect information from BD facilities to determine current environmental impact across many performance indicators, including energy and climate change. EHS&S then sets targets for baseline reduction, strategies for how to achieve reductions, as well as other footprint improvement strategies.

Our 2020 sustainability goals include a 50% emissions reduction target (normalized to cost of products sold) as well as a target to increase renewable energy to 50% of total energy.

An example of how climate change has been integrated into our strategy is through the actions we’ve taken to make

progress toward our 2020 sustainability goals. The Carbon Capital Fund has been used for projects that include HVAC replacements, chiller upgrades, compressed air upgrades and LED installations—each of which has improved the resilience and efficiency of our operations. In addition, the fund was able to match our traditional capital funding for a new co-generation facility at our Fraga, Spain facility. Other projects included upgrades to our fuel cell energy storage in San Jose, California and various major solar installation projects. We have increased our renewable energy credit (REC) purchases to cover nearly all of our US operations in recent years and updated our procurement strategy to evaluate all new energy deals for a green energy option. In total, we have invested over $2 million in solar/green energy through power purchase agreements and RECs.

The most important components of the short-term strategy that have been influenced by climate change have been improvements in our operational practices and visibility to our environmental performance metrics in order to encourage emissions reduction.

Solar panels installation at our Bawal, India, facility.

Assets In terms of asset financial planning, some suppliers, facilities or product lines are impacted by risks and opportunities from climate change. Risks include property damage from acute physical impacts from increased severity of extreme weather events—as seen through Hurricane Maria. These risks are managed as part of general business continuity planning over the medium-term.

By evaluating the financial investments needed for products that are classified as “critical to healthcare,” we evaluate the assets related to “critical to healthcare” products so that we can mitigate the risk of supply should a climate-related event impact a facility where the product is manufactured.

In addition, our Supplier Risk Program manages supply-related risks for raw materials of “critical to healthcare” products.

Liabilities Risks and opportunities from climate change have not been evaluated for our financial planning process specific to liabilities.

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Resilience Our process for identifying, assessing and managing climate-related issues are integrated into multidisciplinary, company-wide risk identification, assessment and management processes.

In 2019, BD undertook climate scenario analysis to better understand how climate-related risks and opportunities could impact the business.

BD partnered with BSR, a global nonprofit that works with its network of over 265 member companies to build a just and sustainable world, to develop four scenarios corresponding to warming by 2100 which explored climate-related risks and opportunities, and other key uncertainties for our business.

These scenarios incorporated credible and publicly available climate projections for emissions reductions and climate impacts. These scenarios, including a 2C or lower scenario, will be reviewed

by our management beginning in 2020 and insights from the scenario analysis will be incorporated into relevant BD business processes and future sustainability commitments.

This strategy has been implemented through our 2020 sustainability goals. We report on progress against our 2020 sustainability goals in annual sustainability reports and via the CDP. Operations leaders review progress against energy and utilities targets on a regular frequency. At the company level, progress on overall sustainability performance is reviewed with the Executive Leadership team on a regular frequency. The most important components of our short-term strategy are to focus resources into meeting our sustainability targets and to increase our use of renewable energy. For example, we have completed more than 650 energy-related projects since setting corporate sustainability targets in 2015, saving $25.6 million.

Long-term, our strategy is to focus on our role in addressing the wide range of environmental, social and governance (ESG) challenges facing our industry, society and planet. This means reducing our own operational impact and understanding the life cycle impact across our value chain, as well as looking at the social sustainability aspects of our business. Our sustainability strategy and 2020 sustainability goals are centered on four key areas of focus to achieve this:

• Innovation: contributing to more sustainable healthcare systems;

• Access: supporting health system improvements in emerging and developing economies;

• Efficiency: working across our value chain to reduce environmental impact and create positive social impact; and

• Empowerment: advancing our purpose-driven culture.

Within our efficiency strategy, we are committed to drive environmental performance through:

• Reducing GHG emissions and increasing climate resiliency through our company’s operations and value chain by focusing on energy conservation and renewable energy;

• Minimizing our company’s environmental footprint and conserving natural resources through a focus on reducing water, waste and air emissions;

• Improving life cycle impacts of products through product and packaging design, and for some product lines, service model solutions; and

• Driving supplier responsibility for fair labor practices and environmental stewardship.

Our strategy enables our business to become more efficient and further enhancing our reputation and brand. This strategy has directly contributed to more efficient operations, reduced energy consumption, and diversification of energy supply through installation of CHP and sourcing of renewable energy, and we have therefore been able to protect against volatility in the energy market and increases in operational costs that could result. A heavy focus on material efficiencies (such as packaging optimization, product density optimization for shipping, greater recycled content and material optimization/reduction) has also been a strategy to maintain cost competitiveness. Our work to communicate GHG emissions avoidance to key customers has also enabled a new dialogue with these stakeholders. In some cases, this has led to opportunities to collaborate to make further environmental improvements.

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Risk managementIdentifying risks At a company level, climate-related risks are identified by the EHS&S team. The process for identifying risks involves stakeholder engagement with our internal technical experts, customers, shareholders, BD associates, business partners (i.e., suppliers), communities, governments, international agencies and nongovernmental organizations.

Climate-related risks are identified and evaluated by the EHS&S team through general sustainability materiality assessments and are informed by our Enterprise Risk Management (ERM) process and business continuity planning in areas such as local carbon regulation and disaster planning (including severe storms).

Physical (operational) risks posed by climate change that could impact our direct operations and/or supply chain and result in disruption to business continuity, are identified and evaluated via processes established within the Integrated Supply Chain function. Risk teams within the ISC team work with individual facilities, business units and subject matter experts to identify and evaluate risks, (which may include but are not confined to climate change impacts). The EHS&S team is also responsible for monitoring compliance to property protection standards through which longer-term systematic risks can be evaluated. The process includes, but is not limited to, aggregation of insurance reports, sustainability risk assessments and third-party tools, such as water risk assessments. Examples of these physical risks include damage to facility and/or product from severe weather (such as Hurricane Maria’s impact on our facilities in Puerto Rico) and upstream fluctuations in the availability of materials (such as hurricanes in Texas impacting refineries, and by extension, resins).

Transitional risks posed by climate change (financial, external, legal and compliance, and strategic) are evaluated at a corporate level by the EHS&S team.

Both physical and transitional risks posed by climate change may also be reviewed within the ERM program, based on risk assessment and other procedures performed to identify and

assess risks against established guidelines. Though risks that are identified as part of our ERM program may be impacted by climate change (for example, supply chain disruption due to extreme weather), climate change may not be named as a specific individual risk. The ERM program is governed by the Executive Leadership team and reports are provided regularly to the full Board or Board committees, as appropriate.

Once risks and opportunities from climate change have been identified, they are evaluated and prioritized by our EHS&S team. This includes assessing key risk areas, evaluating the likelihood and impact, and ranking these risks. Key prioritization components include the magnitude of the event should it occur (financial or reputational), the probability of such an event happening and our direct control to mitigate the risk.

Managing riskOur Integrated Supply Chain (ISC) teams, which include manufacturing, procurement, supply chain and EHS&S, are responsible for collectively managing or mitigating climate change risk.

Climate-related risks (including GHG emissions and water scarcity) were identified by the EHS&S team as risks to the company as a part of the stakeholder engagement and materiality assessments. Our 2020 sustainability goals were implemented to mitigate or manage these risks. Business continuity plans are also created as a result of our processes to manage or mitigate risk posed to our operations.

Updates on our progress are reported internally to management and externally via our sustainability reporting. This reporting helps manage any reputational risk.

Certain transitional risks, such as those posed by carbon regulation, may be managed at a local level where applicable.

Any climate-related risks that may be captured within our ERM process will be managed in accordance with the ERM program governance and includes internal reporting to the Executive Leadership team and Board of Directors.

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The following details how various risks are considered in our climate-related risk assessments:Current regulation

Current regulation is relevant and always included in climate-related risk assessments.

Specific risk assessments include monitoring local regulations, such as carbon taxes and emission trading scheme applicability are reviewed. These climate-related risks are assessed through strategy planning sessions, materiality assessments and business continuity planning.

Emerging regulation

Emerging regulation is relevant and always included in climate-related risk assessments, where emerging is defined as regulation likely to happen in the next 1–2 years.

Risks are monitored at the facility level as part of normal business continuity planning. Specific risk assessments include monitoring emerging local and regional regulations for measures such as carbon taxes, emission trading schemes and energy efficiency schemes. New laws or regulations adopted in response to climate change could also increase energy costs as well as the costs of certain raw materials and components, which are evaluated on an ongoing basis. We may not be able to offset increases in these costs through other cost reductions. Environmental laws, particularly with respect to the emission of GHGs, are also becoming more stringent throughout the world, which may increase our costs of operations or necessitate changes in our manufacturing plants or processes or those of our suppliers, or result in liability to BD. These climate-related risks are assessed through strategy planning sessions, materiality assessments performed by the EHS&S team and business continuity planning performed by ISC teams.

Technology Technology risk is relevant and sometimes included in climate-related risk assessments.

Risks associated with a transition to a lower-carbon economic system on the operational side include the use of renewable energy. Solar power, combined heat and power, and fuel cells are used at various BD facilities to reduce carbon and increase energy efficiency to aid in achieving our 2020 sustainability goals. The 2020 goals were developed to mitigate identified climate-related risks. These climate-related risks are assessed through strategy planning sessions, materiality assessments performed by the EHS&S team and business continuity planning performed by ISC teams.

Legal Legal risks are not relevant because no litigation claims linked to climate-related issues have been identified to date.Market Market risks are relevant and sometimes included in climate-related risk assessments.

Plastics are used extensively across our portfolio of products, therefore regulations on carbon and fossil fuels could result in fluctuating prices. These climate-related risks are assessed through strategy planning sessions, materiality assessments performed by the EHS&S team and business continuity planning performed by ISC teams. Mitigation measures include projects to reduce material usage on products and packaging.

Reputation Reputation risks are relevant and always included in climate-related risk assessments.

Reputation risks are monitored from a general standpoint through customers that prioritize sustainability in their RFPs or purchasing specifications as well as through ESG-oriented investors and analysis on BD from ESG ratings agencies. These climate-related risks are assessed through strategy planning sessions, materiality assessments performed by the EHS&S team and business continuity planning performed by ISC teams.

Solar panel installation at our facility in Suzhou, China.

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Acute physical Acute physical risks are relevant and sometimes included in climate-related risk assessments.

Acute physical risk assessments are generally performed at an asset level and incorporated into business continuity plans. For example, the impact of Hurricane Maria in 2017 on our facilities in Puerto Rico resulted in updates to standard extreme weather evaluations and planned mitigation activities as part of business continuity planning. These climate-related risks are assessed through strategy planning sessions, materiality assessments performed by the EHS&S team and business continuity planning performed by ISC teams.

Chronic physical Chronic physical risks are relevant and sometimes included in climate-related risk assessments.

Risks evaluated include supply disruptions that may result from water scarcity in our direct operations. These climate-related risks are assessed through strategy planning sessions, materiality assessments performed by the EHS&S team and business continuity planning performed by ISC teams.

Upstream Acute and chronic physical risks are evaluated for availability of raw materials. New laws or regulations adopted in response to climate change could also increase energy costs as well as the costs of certain raw materials and components. These climate-related risks are assessed through strategy planning sessions, materiality assessments performed by the EHS&S team and business continuity planning performed by ISC teams.

Downstream Acute and chronic physical risks are evaluated for our ability to make products available to our customers and distributors. New laws or regulations adopted in response to climate change could also increase energy costs. These climate-related risks are assessed through strategy planning sessions, materiality assessments and business continuity planning. In addition, climate change may impact our customers directly, increasing the need for BD to partner with our downstream partners to help build resilience to climate change impacts.

Case study – managing transitional risk and opportunityBD identified emerging carbon regulation as a climate-related risk. Factoring in potential opportunities for cost savings and reputational benefits, BD used this assessment to implement corporate-wide goals to increase energy efficiency, reduce carbon emissions and increase renewable energy;

• Reduce Scope 1 and 2 GHG emissions by 50% (normalized to cost of products sold [COPS]) by 2020 from 2008 baseline;

• Reduce energy consumption by 40% (normalized to COPS) by 2020 from 2008 baseline; and

• Increase the use of renewable energy to 50% of total energy by 2020 from 2008 baseline.

The Carbon Capital Fund was established to aid in meeting these goals. In addition to mitigating risk, the fund also creates an opportunity to reduce energy consumption, which reduces our operating costs. In 2019, BD was able to save approximately $4.9 million from efficiency projects.

Solar panels installed at our Canaan, CT, site. A total of 2.9 mega-watts are generated from solar panels at this site.

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Metrics and targetsWe currently measure our Scope 1, 2 and 3 emissions, and have set a target to reduce Scope 1 and 2 emissions by 50% by 2020. This target is measured against a baseline of FY 2008 and are normalized against COPS.

We report absolute Scope 3 emissions but have not set targets for Scope 3 emissions reduction.

Scope 1, 2 and 3 emissions data can be found at the end of this report and in the Efficiency section of the 2019 Sustainability Report. We disclose emissions annually via our sustainability report and to the CDP.

In FY 2019, we reduced emissions by 48% absolute, (from our baseline year of 2008; when normalized against COPS, the reduction was 67% from the baseline year of 2008). Data from

BD Interventional (formed following the acquisition of CR Bard) was included in our calculations for the first time in FY 2019.†

Scope 1 and 2 emissions data is collected from our facilities globally via a third party online data collection system. In FY 2019, we made improvements to our data collection processes, increasing the number of sites in our boundary and incorporating previously excluded sites. Data accuracy was improved due to increased data collection and the reduction in estimated data. (Over 98% of our manufacturing locations report data.)

In FY 2020, we began developing our 2030 sustainability strategy, where we plan to address certain risks and opportunities—particularly from Scope 3 emissions. We also plan to set science-based targets for Scope 1 and 2 emissions reductions later in 2020.

Decoupling growth from environmental footprintStrong focus on energy efficiency coupled with deployment of cost-effective renewable energy strategies have led to lower overall footprint while continuing revenue growth.

†Prior to inclusion of Bard, our FY 2018 emissions, when normalized, had been reduced by 75% from the baseline year FY 2008.

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FY 16 FY 17 FY 19

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GHG emissions—Scope 1 and 2Measurement and UOM FY 2008

baseline FY 2009 FY 2010 FY 2011 FY 2012 FY 2013 FY 2014 FY 2015 FY 2016 FY 2017 FY 2018 FY 2019

Total GHG emissions

Scope 1 absolute (metric tonnes CO2-e), legacy Bard

11,345 11,345 11,345 11,317 14,932 16,869 20,727 17,486 16,434 23,856 36,781 16,357

Scope 1 normalized (metric tonnes CO2-e per $M COPS), legacy Bard

12 12 11 10 13 14 17 13 12 17 36 12

Scope 1 absolute (metric tonnes CO2-e), legacy BD

87,852 88,809 91,327 85,931 84,125 80,251 77,505 76,850 74,989 88,730 100,402 101,875

Scope 1 normalized (metric tonnes CO2-e per $M COPS), legacy BD

18 19 18 16 15 14 13 14 12 14 13 13

Scope 1 absolute (metric tonnes CO2-e), combined

99,197 100,154 102,672 97,249 99,057 97,120 98,232 94,336 91,424 112,585 137,183 118,232

Scope 1 normalized (metric tonnes CO2-e per $M COPS), combined

17 18 17 15 15 14 13 14 12 15 16 13

Scope 2 absolute (metric tonnes CO2-e), legacy Bard

65,713 65,800 62,976 63,338 62,380 63,281 68,212 75,016 73,554 78,335 70,006 65,786

Scope 2 normalized (metric tonnes CO2-e per $M COPS), legacy Bard

70 70 62 59 56 54 55 58 55 54 69 48

Scope 2 absolute (metric tonnes CO2-e), legacy BD

530,133 511,114 430,824 377,152 310,580 249,722 266,936 226,888 169,073 164,483 145,002 175,552

Scope 2 normalized (metric tonnes CO2-e per $M COPS), legacy BD

112 108 84 71 56 44 44 41 26 27 19 23

Scope 2 absolute (metric tonnes CO2-e), combined

595,846 576,914 493,800 440,490 372,959 313,003 335,148 301,904 242,627 242,818 215,007 241,338

Scope 2 normalized (metric tonnes CO2-e per $M COPS), combined

105 101 81 69 56 46 46 44 31 32 25 27

Total absolute (metric tonnes CO2-e), legacy Bard

77,058 77,145 74,320 74,656 77,312 80,150 88,939 92,502 89,989 102,190 106,787 82,143

Total normalized (metric tonnes CO2-e per $M COPS), legacy Bard

83 82 73 69 69 68 71 71 67 71 105 59

% reduction from baseline -28%

Total absolute (metric tonnes CO2-e), legacy BD

617,985 599,923 522,151 463,083 394,705 329,973 344,441 303,738 244,062 253,213 245,404 277,427

Total normalized (metric tonnes CO2-e per $M COPS), legacy BD

130 127 102 87 71 58 57 54 38 41 32 36

% reduction from baseline -72%

Total absolute (metric tonnes CO2-e), combined

695,043 677,068 596,472 537,739 472,017 410,123 433,380 396,240 334,051 355,403 352,191 359,570

Total normalized (metric tonnes CO2-e per $M COPS), combined

122 119 97 84 71 60 59 58 43 47 40 40

2020 goal: Reduce Scope 1 and 2 GHG emissions by 50% (normalized to COPS). Current status: reduced by 67% TARGET ACHIEVED Data represents Scope 1 (direct) and Scope 2 (indirect from electricity) energy sources. BD uses emission factors that are temporally, geographically and technologically accurate for each site and source within its operational boundary as specified by the WRI/WBCSD GHG Protocol. This includes updating electric power emission factors to reflect changes in the grid mix for areas in which BD operates. In general, historical emission factors remain consistent with the publication that was most recent at the time of original reporting.

Legacy Bard Legacy BD BD + Bard combined

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GHG emissions—Scope 3Measurement and UOM FY 2012 FY 2013 FY 2014 FY 2015 FY 2016 FY 2017 FY 2018 FY 2019

GHG (absolute) (metric tonnes Co2-e)

Purchased goods and services 966,282 1,069,505 1,065,132 1,147,5521

Capital goods 42,728 37,691 39,602 21,5162

Fuel-and-energy-related activities (not included in Scope 1 or 2)3 106,340 103,995 106,451 106,360 101,856 105,617 111,946 101,392

Upstream transportation and distribution 72,640 125,904 280,636 286,0511

Waste generated in operations1 15,266 15,302 13,789 13,071 15,465 15,380 19,239 19,359

Business travel4 35,273 38,230 41,171 68,259 107,049 95,612 117,116 147,795

Employee commuting 1,743 9,157 13,061 4,888 102,232 73,195 83,829 138,0101

Upstream leased assets 27,094 47,011 32,299 1,3595

Downstream transportation and distribution Not relevant6 Not relevant6 Not relevant6 Not relevant6

Processing of sold products Not relevant6 Not relevant6 Not relevant6 Not relevant6

Use of sold products 263,924 298,638 326,682 415,8821

End-of-life treatment of sold products 87,558 97,082 191,821 192,4407

Downstream leased assets Not relevant6 Not relevant6 Not relevant6 1,5245

Franchises Not relevant6 Not relevant6 Not relevant6 Not relevant6

Investments Not relevant6 Not relevant6 Not relevant6 Not relevant6

2020 goal: Establish Scope 3 GHG emission baselines for categories applicable to BD. Current status: We provided limited reporting of Scope 3 emissions in previous years, and in FY 2019 we continued to work with external partners to establish baseline Scope 3 emissions across all categories. This information will be used to inform future strategy.

2020 goal: Initiate climate resilience planning for BD facilities. Current status: As the devastating hurricanes across the U.S. in 2017 demonstrated, resilience planning for extreme weather events is essential to ensure operations are restored as quickly as possible. Work has been carried to deepen our understanding of potential risks to our supply chain and operations, to ensure potential impacts are mitigated or reduced. Further work was carried out in FY 2019 to understand risks and opportunities associated with climate change and will be reported on in future reports.

1 Includes CR Bard. 2 Includes CR Bard. Reduction is driven by change in sector classification, which have lower capital goods emission intensities. 3 Data for all years reported has been recalculated to include legacy CR Bard. Data for all years also now includes emissions related to transmission and distribution losses and well to tank emissions from all energy sources, not just electric power. (In prior years, we disclosed emissions related to transmission and distribution losses from electric power only.) 4 FY 2019 includes CR Bard. FY 2016 and FY 2017 have been restated due to error in earlier calculations.5 Includes CR Bard. Significant decrease due to more accurate data used in calculations.6 Relevance based on 1% threshold relative to total Scope 3 emissions inventory. Determined this category to be not relevant to the company’s business activities and did not estimate the associated GHG emissions.7 Emissions are for a subset of our portfolio only.

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